Ugly, Tailing 10Y Auction Drags Yields To Session Highs

After yesterday's mediocre 3Y auction and today's selloff across the curve, moments ago the US Treasury sold $24 billion in 10Y paper in an auction that was quite poor.

The high yield of 2.915%, while the lowest since July and far below November's 3.221%, tailed the When Issued 2.910% by 0.5bps, and was only the 2nd tailing 10Y in the past 7 auctions.

The Bid to Cover slumped from 2.54 to 2.35, the lowest since February and well below the 2.53 six auction average.

The internals were similarly ugly, and while Directs rebounded from last month's abnormally low print of 1.2% as most other recent auctions have done, printing at 10.8%, just above the recent average of 9.7%, it was the drop in Indirects from 73.8% to 63.1%, the lowest since August, that was notable and another indication of waning foreign appetite for US paper. Finally, dealers were left with 26.1%, right on top of the 26.2% six auction average.

Overall, a poor auction which was not well-accepted by the market, and which has sent the 10Y yield to session highs of 2.915% after the results printed.